Are You Ready to Retire?

Occasionally a statistic pops out at you that sort of hits you in the head. I read one this afternoon. It’s not a surprising number for me, but it is one that is downright scary when you think about some of the realities of preparing for retirement.

I read this in the Retirement Confidence Survey published by the Employee Benefit Research Institute. It reports that in 2010, twenty-seven percent of Americans say they have less than $1,000 in savings. Furthermore, more than half of workers (54 percent) report that the total value of their household’s savings and investments, excluding the value of their primary home and any defined benefit plans (there are only 38,000 of these), is less than $25,000.

In short, a third of us don’t have enough money to live a month, and over half don’t have enough to live more than about six months at their current standard of living. Not many are ready to retire. And they are not preparing for retirement.

In the last few years a lot of folks have already found out what it is like to lose their source of income. Tragically for many it has meant bankruptcy. For a large number it has even meant becoming homeless. It is a sad reality.

But realistically, in time everyone faces retirement. Some of us will work a lot longer than others. Many for a lot longer than they want. But not everyone can continue to work when older because their health may not permit it. Even at today’s rates social security will not sustain us. And the future for social security is dismal.

Few things are more important in our financial planning than making intelligent decisions about how we will feed ourselves in the future. In other words, we need to get ready to retire starting early in life. But clearly many are not preparing for retirement.